Welcome to Knowit's third quarter 2026 presentation. My name is Christina Johansson, and I am Chief Communications Officer at Knowit. In the studio today, we have Fredrik Walde Ekerhovd. He is our new President and CEO, and he will take you through the numbers together with Marie Björklund, our CFO. After the presentation, they will answer your questions. Over to you, Fredrik.
Thank you, Christina. I am very happy to be here presenting my first quarterly presentation as CEO, and I am pleased to have the opportunity to share our results with you. But before we turn to the numbers, I would like to say a few words about where we are heading as a company. Knowit has a strong foundation. We have highly skilled people, long-standing client relationships, and a proven ability to combine technology and business expertise to create real value for our clients. At the same time, our industry is changing rapidly. AI is fundamentally reshaping what our client needs, how technology is developed, and how we deliver our services, and we intend to be at the forefront of that change. That is why we are accelerating the transformation of Knowit. Our ambition is clear: to build a simpler, more client-focused company with a stronger foundation for profitable growth.
The new country-led organization, which we announced in early September, is an important step in that direction. Ultimately, our success will depend on our people, and I am confident that we have the capabilities, the commitment, and the leadership to succeed. Now, let us dive into the highlights from the third quarter. We are pleased to report a strong third quarter with clear improvements in profitability. We maintained revenues at last year's level, despite having 7% fewer employees compared with the same quarter last year. This demonstrates that the measures we have taken to improve our operational efficiency are delivering results. Our adjusted EBITA margin increased from 5.1% last year to 6.7% this quarter. The improvement is driven by higher utilization, disciplined cost control, and positive development in hourly rates as increased sales activity.
We are seeing solid performance across several markets and business segments, with Norway standing out as a strong contributor. At the same time, we continue to see new business opportunities emerging from AI. More clients are moving beyond experimentation and pilot projects towards large-scale AI implementation. This is an important development for Knowit. With our broad expertise and strong tech partnerships, we are well-positioned to support our clients throughout this journey, from strategy and advisory to implementation and ongoing development. As mentioned, we have announced a fundamental change to how Knowit is organized and managed. Effective October 1st, we have moved to a country-led operating model. Going forward, our consulting operations will be managed and reported through our four Nordic countries: Sweden, Norway, Finland, and Denmark. In addition, products will remain a separate business area, reflecting its distinct business model. The rationale behind this change is straightforward.
We want to simplify Knowit. We want to bring decision-making closer to our clients and establish clear accountability for performance in each market. We also want to reduce organizational complexity and create a more efficient cost structure. Importantly, this transformation is about more than cost savings. It is about creating a stronger platform for growth, improving the client proximity, and enabling teams to work more effectively across capabilities. Our newly appointed country leaders are now driving the work to establish a new operating structure in their respective markets, and we are making good progress. We expect the new organizational structure to generate an annual cost savings of SEK 100 million. These savings will build gradually with full effect from the third quarter of 2027. The restructuring costs are expected to total SEK 70 million, of which SEK 7.5 million was incurred in the third quarter of this year.
To provide a clear view of our progress, we will report both savings achieved and restructuring costs incurred in each quarter from Q4 2026 throughout Q3 2027. This is the final quarter in which we will report and comment on our performance under the previous business area structure. Let me start with our largest business area solutions. Solutions reported net sales of SEK 613 million in the third quarter, with an EBITA margin of 9.3%. Operationally, solutions is delivering a stable performance, primarily in Norway, where performance has a strong revenue growth and profitability. However, to drive further improvements in profitability, we need to return to growth. Sales activities remains high, and we have signed several new deals in the quarter. Towards the end of the quarter, we saw encouraging signs in Sweden, although market conditions remained challenging in certain regions.
Overall, our priority is clear: maintain operational discipline while strengthening our commercial momentum. Moving on to Knowit Experience, our digital agency. Knowit Experience reported net sales of SEK 222 million in the quarter with an EBITA margin of 5%. We are pleased to see the positive margin trend continuing with a significant improvement compared with the same quarter last year. Sweden continues to perform well, supported by strong commercial momentum and several new project wins. Norway, however, remains challenging. Here, improving the utilization will be an important priority to secure a sustainable profitability. Looking ahead, we see significant opportunities in the intersection of AI, data, and customer experience. This is an area where Knowit Experience has a highly relevant offering. By combining technology, data, and our creative capabilities, we can help our clients deliver better customer experience while improving their business performance. Turning to connectivity.
The business area reported net sales of SEK 129 million in the third quarter. The adjusted EBITA margin was 8.2%, only slightly below the corresponding quarter last year. While profitability remains relatively stable, growth continues to be a challenge. This has also limited our ability to improve margins further. The telecommunications markets remain difficult, with clients taking longer to commit. On the positive side, demand from the defense sector remains strong, and we continue to shift capacity towards this market where we see attractive opportunities. During the quarter, we signed several new agreements, and we are also seeing opportunities related to our nearshoring through our operations in Poland. Moving on to insight. The business area reported net sales of SEK 185 million, with an adjusted EBITA margin of 2.1%. This represents an improvement compared with the third quarter last year, when the business reported a loss.
The positive development is supported by a more focused sales effort and an increase in traditional management consulting projects. However, profitability is still below our expectations. We therefore need to maintain a strong focus on operational efficiency, increase utilization, and win new deals. Looking at the market demand, we see a growing interest in transformation execution. Clients need support in defining strategies, implementing the change, and embed AI into their day-to-day operations. Finally, products. Products reported net sales of SEK 82 million in the third quarter, with an EBITA margin of 16.2%. This represents an improvement compared with last year. Overall, products delivered a strong quarter with high activity levels and a strong profitability. We saw a very strong development within the smart mobility and defense space. Strategically, our focus remains on developing the scalable solutions that combine our own IP with deep specialist expertise.
An important part is the reuse of the solutions we make across clients and markets. This allows us to scale more effectively, strengthening the long-term client relationships, and to create a more predictable business. We see products as an important part of Knowit's long-term development. Over to you, Marie.
Thank you, Fredrik. Turning to our financial performance for the quarter. We reached sales of approximately SEK 1.2 billion , a decrease of 0.2%. This means we are more or less flat compared to the same quarter last year. Although we did have a positive currency effect, it was +3%. We consider the development encouraging since our number of employees are down by 7%. Turning to profitability, our adjusted EBITA amounted to SEK 81.7 million compared to SEK 62.5 million last year. This means an EBITA margin of 6.7% compared to 5.1% last year. The improvement is driven by higher utilization, increased hourly rates, and also, of course, continued cost control. This quarter, we have taken SEK 7.5 million in severance costs. Moving on to our financial position. Our financial position remains strong. We have a healthy balance sheet, and we have a good financial flexibility.
At the end of September, cash amounted to SEK 262 million , and our used credit facilities amounted to SEK 266 million. Other liabilities amounted to SEK 515 million , and this brings us to a total net debt of SEK 519 million compared to SEK 608 million last year. Net debt to EBITDA ratio was 1.1x at the end of this quarter, compared to 1.2x in the third quarter last year. If we remove IFRS lease liabilities, we have a net debt to EBITDA ratio that amounts to zero. This means that we do have a solid financial position, which of course give us flexibility moving forward. Now, let's take a look at the development of revenue and EBITA, adjusted EBITA, both on a quarterly but also on a 12-month basis. Looking at revenue, we are now at approximately SEK 5.6 billion on a rolling 12-month basis.
As you can see, the declining revenue has started to level off, which we are of course, satisfied with, but we do realize that we have work to do to return to growth again. Turning to profitability, adjusted EBITA for the last 12 months amounted to SEK 343 million , corresponding to a margin of 6.1%. It is encouraging to see that profitability has started to recover, especially since we have a challenging market still. The improvement in the third quarter is a positive step, and our focus remains to get back to profitable, sustainable growth. Next, let us look at our client segments. We have a broad and diverse customer base. The public sector amounted to 43% in this quarter, compared to 39% the same quarter last year.
In retail and services, we have had some challenges with one major client postponing assignments, and we have a little bit of the same situation in the industrial segment. On a positive note, we have the defense sector, and we can see that we are improving there, and there is a very good demand, and we have possibilities to improve even further in the years to come. Overall, our broad client base across different industries provides stability, obviously, and we have many segments where there is room to improve and take on more business. With that, I leave it to you, Fredrik, to say some final words.
Thank you, Marie. To conclude, we are encouraged by the progress that we have made during the third quarter. We delivered improved, adjusted profitability, and a stronger margin, demonstrating that the operational measures we have implemented over the past year are delivering results. Looking across our markets, Norway continues to perform strongly. We see progress in Sweden and encouraging signs of improvement in Denmark. In Finland, we still have work to do before we can point to a sustained positive trend. Looking ahead, we see attractive growth opportunities within AI, data, and defense. These are areas where Knowit has strong capabilities and where we believe we can create significant value for our clients. We also continue to develop more scalable offerings within products, supporting our ambition to build a more resilient and profitable business. Importantly, on October 1st, we introduced our new country-led organization.
This is a significant step in our transformation. It will bring us closer to our clients, simplify our operations, and strengthen accountability in each market. We expect the transformation to generate an annual cost savings of SEK 100 million, with a full effect in the third quarter of 2027. These savings will primarily come from reducing overlapping roles, simplifying our legal structure, and improving the efficiency of our internal processes. To summarize, we are making good progress on profitability. We see clear opportunities for growth, and we are building a simpler and stronger Knowit for the future. With that, thank you for joining us today.
We will now open up for questions. To ask a question by phone, press star five to enter the queue. When it's your turn to speak, press star six to unmute your microphone. You can also submit questions through the webcast using the field in the bottom right corner of your window. The next question comes from Jesper Stugemo at Handelsbanken. Please go ahead.
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Hello, and good morning. Can you hear me now?
Yes.
Yes. Hello.
Okay, great. Thank you. Hi, and congrats to the strong report here today. I have a few questions, beginning with the annual cost savings of SEK 100 million here, a full effect from Q3, but do you think that we could see a positive net effect first in Q3, or could this already trickle in before that, for example, in Q1 or Q2? The SEK 70 million in restructuring charges, will it be linear, or do you have any guidance for this?
Hello, Jesper, and thank you for calling in. We estimate the cost savings to approximately SEK 100 million, as we said, with full effect from Q3 in 2027. The savings will be built gradually as we implement the new organization. The restructuring costs of SEK 70 million, I would say that we currently expect just over half to be recognized this year, with the remaining in 2027. Out of respect for the process and the people involved, it is difficult to give a precise quarterly breakdown at this stage. We will update our estimate of both costs and savings in our quarterly reports, including the savings realized to date.
Okay. Thank you. That is clear. This is coming from mainly reducing overlapping roles, billable consultants, admin, or other costs?
I would say it is mainly overlapping roles. It is also reducing the complexity in the organization. We are looking over the legal entities, so it is mainly personnel-related cost savings.
Just to add to what Marie said, our ambition, Jesper, is to be able to do this without basically showing an effect on our top line. We will be able to take out this cost without that significantly impacting our top line.
Yeah, okay. Good. The second question, insight, it was a quite impressive comeback. How sustainable do you think this improvement is that we saw in Q3, given it has been a bit bumpy historically?
Yeah. We see that the market has come back. Just part of the insight business, which we are very happy to see that. We hope that will continue now in the months and quarters to come. It is hard to predict, really. We know that some of those assignments do not have a very long duration, and the market changes fairly rapidly. I think it signals well.
Yes, it is true that it is an improvement. However, the adjusted margin is still at 2.1%, so there is more work to do. As Fredrik said, it is shorter assignments, so it limits the visibility.
Yeah. I see. Thank you. Given that Norway is looking better than Sweden, do you think that you, or do you already have a positive net recruitment if you are in Norway alone, and it is mainly Sweden and Finland maybe that is waiting on the net recruitment? How should we view this and your path to a positive net recruitment once again?
Well, year to date, we have a negative net recruitment, and it is a little bit hard for us to predict when we will see that change. We do not think that will change even in Q4. I do not know, Marie, is he onto something in terms of Norway having a little bit of a stronger net recruitment?
No, actually, Norway is not yet at a positive net recruitment. It is looking better. Mainly the positive net recruitment is coming from defense, cybersecurity, and areas where there is a good demand, but not yet back to positive net recruitment in Norway is the short answer.
All right. One final from me here. Could you just help me understand the lower elimination costs on the reported EBITA level in this quarter? It was a bit lower than our estimate.
I think I'm going to have to get back to you on that.
Okay. Sure.
Yeah.
Yeah, sure. Okay. Thank you, guys. Good luck in Q4 here.
Thank you, Jesper.
As a reminder, to ask a question, press star five on your telephone. We have a question in line from AAT Invest. Please go ahead.
Hello, can you hear me?
Yes. Hello.
Yeah, hello. Thank you very much. Congratulations with the quarter. I just have one question. I see that you have a very strong balance sheet with no debt, which Marie mentioned. Looking forward, regarding using the balance sheet for profitable growth, how do you see it? What is your priorities here in the years going forward? Thank you.
Well, we know of our situation, as we are saying, that we consider our balance sheet to be strong. For the time being, doing M&A or acquisitions is not really high on our agenda. We have a big transformation ongoing internally. That means that we will look into what will that balance sheet be for us and our shareholders in the time to come. That's on our agenda.
Yes.
Do you want to add something, Marie?
Yeah. As I mentioned, our low financial debt gives us flexibility and the priority for us right now is to improve operational performance and deliver on these restructuring measures that we talked about. But of course, we know we can use the balance and we do look at selective acquisitions, even if we are not making anything the top priority right now. But we know that there is possibility of share buybacks. We know we can give dividends, et cetera. We know the tools in the box, so to say, and we are discussing them.
Thanks a lot. Looking forward to the future, and good luck.
Thank you very much.
Thank you.
The next question comes from Martin Wahlström at SB1 Markets. Please go ahead.
Thank you very much. Good morning. Can you hear me all right?
Yes. Hello.
Hello. Hello. Excellent. Just one more question from me related to the pro forma numbers for the new structure. Any update on when those will be available?
Sorry, could you repeat the—
The pro forma numbers?
Yeah.
Yes. We said that we will deliver them during the fourth quarter. Of course, that means before year-end, but I think that we can quite soon give them to you, and we will put them on the website, so it is available in Excel as well.
Okay. Excellent. That was all I had, and congrats on the strong report.
Thank you very much.
We have no more phone questions in line, so I hand the word back to the speakers.
Thank you very much. There is no other questions, yeah? Then it is up for me to say thank you for attending. It has been a pleasure to present the third quarter, and I hope to see you again in the fourth quarter. Thank you very much.
Thank you so much.